Potential customers in Hanoi still receive offering letters of marketing RIVERSIDE RESIDENCE project invested by Phu My Hung, estimated to be publicised earlier March this year. During the hot time of market, A-level projects have never taken much sweat like that.
The property market has stagnated during 2008 and showed no sign of melting. However, property experts are forecasting of a potential source of money pouring into the market.
It was hard to approach offers to sell apartments at senior housing projects like Golden Westlake, The Manor, Ciputra, Trung Hoa - Nhan Chinh (Hanoi) one year ago. At present, it is relatively easy to buy houses at basic and negotiable price”!
According to statistical data, price of housing land in many areas in Hochiminh City has fallen 60 – 70 per cent compared to 2007. Price of senior apartments has dropped 30 – 40 per cent but the market remains gloomy.
New resources
Real estate is not included in the group of 13 objects eligible to receive the refund of 4-per-cent interest rate in 2009.
The property market after overheating now suddenly freezes as the State Bank tightens the source of money pouring into the market and inspects loans for real estates. After banks announcing resumption of lending real estates, interest rates go up too high, more than 20 percent a year, so that businesses are impossible to approach the bank loans. Especially, sale of houses and land becomes more difficult as speculators and residents turn their backs to the market, the main reason pushes property dealers into the hard position and makes them to slow down the project progress, or sell the projects to other investors.
Nguyen Phuoc Thanh, Vietcombank Director General, assessed that demand stimulus packages via interest rate subsidy, tax reduction, etc., would more or less pour more money into the market, then directly or indirectly affecting the market.
Banks are no longer contained to limit of credit growth. Many banks set high target of credit growth in 2009 so lending for property projects will be definitely more favourable. Furthermore, interest rates are cut down constantly to the cap of 10.5 per cent so that businesses can access lower input costs.
Low lending interest rates also pull mobilising interest rates to lower levels. Therefore, people having idle money have to think whether they should put their money in banks or invest. One of the traditional investment channels is buying real estates. For instance, investing in an apartment at Trung Hoa - Nhan Chinh urban residential centre (Hanoi) at the price of US$120,000 and having it for rent at US$1,000 a month. Such rental is high and shows no risk of "slippage in prices" like bank deposits.
Lending for consumption has also been kick-started again after the State Bank removed interest rate cap applied to this area. The banks' favourite mortgage remains land and housing, and lending for buying, building and repairing houses. Credit for consumption and other investment decisions will help the property market to receive big financial resources from individual investors in the coming time.
Another factor good for the market recovery is the Government's suspension of implementing personal income tax. In the interim, sellers of houses and land do not have to pay this tax.
Lowering interest rates is petition from property enterprises during the time of high interest rates. The current rates definitely have good effects on the market in 2009. However, it always takes time for the policies to come into life. Moreover, many investors have already made heavy losses over the past time so the market has not showed really positive response. Businesses hope that the market can rebound in the second half of the year as procedures on negotiation, appraisal of lending projects often take 3 - 6 months. They expect the market will enter the period of stability with the support of new sources of fund.
Investment trends
During the market decline over the past time, the most recognisable thing is price downtrend of luxurious apartments and project land, where speculators found great profits when the market in the bubble period. Price of in-town house, small-sized apartments aimed at real demanders is relatively stable. The buyers not the sellers are controlling the market.
A host of high-ranked apartment projects are taking all efforts to look for customers though the prices are lowered. Those who already bought apartments at the price of US$2000 - 3000 / m2 are suffering from big losses and reluctantly sell their real estates to pay for bank loans. There are clearer evidences showing that businesses quickly move to the market segment of cheap houses to attract the majority of customers. Many companies are making plans and investment promotion in this segment, promising that low and medium-income earners will have more opportunities to approach this source in the future.
One of enterprises staying away from big impacts of market decline is Housing and Urban Development Corporation (HUD) as it always directs its strategy to developing houses on demand. When the market fell, buying a house of HUD was not easy because the price is relatively affordable, service quality at high apartment buildings is pretty good at the cheapest price. In the context of sliding market, HUD still boosted investment in new projects. Nguyen Thang, HUD Chief of Office, said: Our products are customers' favourite since we serve the real demand. We have expanded our investment to well prepare for the market development in the coming time.
Many businesses have rapidly shifted investment to medium-priced apartments. Some foreign investors are eyeing this market segment.
As Pham Sy Liem, Vice President of Vietnam Construction Association, said the real estate market was an economic thermometer. The economic growth has been lower over the past time but stayed positive. This is a premise for property dealers to continue their projects. Although they are not directed supported in interest rates to invest in projects, banks' reducing interest rates will be big motivation for buying houses. There are many possibilities that the liquidity of property market will be improved in the near future.
Mr Thang assessed that the demand for houses was on the rise thought the market was in the hard time. The market demand was huge ranging from cheap to expensive houses, from low-priced to luxurious apartments. Small projects directly serving residential needs will keep growing. As for bigger ones, only efficient projects have the opportunities.
Minh Chau
Vietnamese
